FRINGE BENEFIT TAXATION

PROBLEM 1
Rubio Company leased a residential house for the use of Ms. Collantes, its branch manager.
The rent agreed upon under the lease contract was P 120,000 per month.
Compute the following:
1(a). Fringe benefit tax for the month if the branch manager is a resident citizen.

Value of Fringe Benefit per month 120,000

Monetary Value rate x 50%
Monetary Value 60,000
Gross-up rate ÷ 65%
Gross-up Monetary Value 92,307.69
Fringe Benefit Tax rate x 35%
Fringe Benefit Tax per month 32,307.69

1(b). Fringe benefit tax for the quarter if the branch manager is a resident citizen.

Fringe Benefit Tax per month 32,307.69

Months x 3
Fringe Benefit Tax per quarter 96,923.07

1(c). Fringe benefit tax for the month if the branch manager is NRA-ETB.

Value of Fringe Benefit per month 120,000

Monetary Value rate x 50%
Monetary Value 60,000
Gross-up rate ÷ 75%
Gross-up Monetary Value 80,000
Fringe Benefit Tax rate x 25%
Fringe Benefit Tax per month 20,000

1(d). Fringe benefit tax for the quarter if the branch manager is NRA-ETB.

Fringe Benefit Tax per month 20,000

Months x 3
Fringe Benefit Tax per quarter 60,000

PROBLEM 2
Cortan Company bought a residential house and transferred the title of it to Mr. Lim, its President.
The house was acquired at a cost of P3.5million. Its zonal value is P3.2million and assessed value
is P3.4million.
Compute the following:
2(a). Fringe benefit tax if the president is a resident citizen.

Value of Fringe Benefit 3,400,000

Monetary Value rate x 100%
Monetary Value 3,400,000
Gross-up rate ÷ 65%
Gross-up Monetary Value 5,230,769.23
Fringe Benefit Tax rate x 35%
Fringe Benefit Tax 1,830,769.23
 2(b). Fringe benefit tax if the president is NRA-ETB.
Value of Fringe Benefit 3,400,000
Monetary Value rate x 100%
Monetary Value 3,400,000
Gross-up rate ÷ 75%
Gross-up Monetary Value 4,533,333.33
Fringe Benefit Tax rate x 25%
Fringe Benefit Tax 1,133,333.33

PROBLEM 3
Bolo Company purchased a property at an installment price of P3million and allows its use to
Mr. Lezano, President of the company.
Compute the following:
Scenario 1: Property is REAL PROPERTY (e.g. House and lot)
3-1(a). Fringe benefit tax if the president is a resident citizen.

Value of Fringe Benefit(5% x 3M)/12 12,500

Monetary Value rate x 50%
Monetary Value 6,250
Gross-up rate ÷ 65%
Gross-up Monetary Value 9,615.38
Fringe Benefit Tax rate x 35%
Fringe Benefit Tax per month 3,365.38
Months x 3
Fringe Benefit Tax per quarter 10,096.14

3-1(b). Fringe benefit tax if the president is NRA-ETB.

Value of Fringe Benefit(5% x 3M)/12 12,500

Monetary Value rate x 50%
Monetary Value 6,250
Gross-up rate ÷ 75%
Gross-up Monetary Value 8,333.33
Fringe Benefit Tax rate x 25%
Fringe Benefit Tax per month 2,083.33
Months x 3
Fringe Benefit Tax per quarter 6,249.99

Scenario 2: Property is PERSONAL PROPERTY (e.g. CAR)

3-1(a). Fringe benefit tax if the president is a resident citizen.

Value of Fringe Benefit(20% x 3M) 600,000

Monetary Value rate x 50%
Monetary Value 300,000
Gross-up rate ÷ 65%
Gross-up Monetary Value 461,538.46
Fringe Benefit Tax rate x 35%
Fringe Benefit Tax per month 161,538.46

3-1(b). Fringe benefit tax if the president is NRA-ETB.

Value of Fringe Benefit(20% x 3M) 600,000

Monetary Value rate x 50%
Monetary Value 300,000
Gross-up rate ÷ 75%
 Gross-up Monetary Value 400,000
Fringe Benefit Tax rate x 25%
Fringe Benefit Tax per month 100,000

THEORY
4-1: What type of tax is Fringe Benefit Tax (FBT)? ____Final Tax_____________________________
4.2: When is FBT required to be filed? ______Quarterly_____________________________________
4.3: What BIR form or return needs to be filed for FBT? BIR Form No. 1603 – Quarterly Remittance
Return of Final Income Taxes Withheld (On Fringe Benefits Paid to Employees Other than Rank
and File)

POINT SYSTEM:
PROBLEM: Two (2) points for each item with correct solution and answer, otherwise zero (0)
THEORY: 1 point each
TOTAL: 23 points